How Google beat the feds

Google escaped from a nearly two-year federal antitrust probe with only a few scratches by proving that the best defense is a good offense.

Instead of ignoring Washington — as rival Microsoft did before its costly monopolization trial in the 1990s — Google spent about $25 million in lobbying, made an effort to cozy up to the Obama administration and hired influential Republicans and former regulators. The company even consulted with the late Robert Bork and The Heritage Foundation and met with senators like John Kerry to make its case. In other words, these traditional outsiders worked the system from the inside.

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POLITICO predictions for tech in 2013

This calculated and expensive charm offensive paid off Thursday when the Federal Trade Commission decided not to challenge the company’s dominance of the Internet search business in court and settled the investigation with what critics allege is a slap on the wrist.

“It was a multiyear campaign focused on this very moment, knowing as the company grew these issues were going to come up,” said Alan Davidson, former head of Google’s office in Washington who left last year for the Massachusetts Institute of Technology. “We had the benefit of watching those who had come before us, and we saw the mistakes that were made. We didn’t want to replicate what they had done.”

The results — a voluntary pledge to change some search and ad business practices and a legal agreement to stop using patents as weapons against foes — are a far cry from the lengthy federal antitrust throttling Microsoft endured at trial in the 1990s. Some say the government’s antitrust fight with Microsoft permanently clipped its wings in the technology sector and paved the way for companies like Google.

Google wasn’t about to accept the same fate — and rather than come late to Washington, as its predecessor did, the search company girded for a fight.

Google’s game plan was to work the refs early and play nice with regulators rather than to plunge into an unpredictable federal court trial. It was a strategy that worked in other entanglements — especially over online privacy — between the company and the FTC.

In doing so, Google’s actions reflected the overall maturation of Silicon Valley’s relationship with Washington. Where the tech world had been dismissive of the meddling bureaucracy, Google’s actions signified an industry more willing to shape the rules rather than to fight the regulators.

To ward off an antitrust case, Google relied on alliances with The Heritage Foundation and liberals like free-speech advocate Eugene Volokh and former FTC staffer David Balto. They helped raise public doubts about an antitrust probe of a company that had received praise in the president’s State of the Union address. The company also flew in its billionaire impresarios from Silicon Valley for meetings on Capitol Hill and at the FTC.

The influence campaign also worked its magic at the agency, where Chairman Jon Leibowitz had fought the Justice Department to take on what was thought to be a case of a lifetime. Google hired former FTC lawyers and staffers to help plead its case and recently brought CEO Larry Page in for an interview. Two years later, Leibowitz announced — amid speculation he was leaving the agency — that the FTC didn’t have enough proof to go for a more robust case.

“I think that Google took advantage of the chairman’s desire to go out in a blaze of glory, and they tried to assure him that this was going to be good enough — and this was not good enough,” Commissioner J. Thomas Rosch told POLITICO on Thursday. Rosch voted to close the search case but did not signal in his dissent that he would have backed a robust set of search penalties against Google.

As the FTC wound down its Google probe in November, Google even dispatched Executive Chairman Eric Schmidt to meet with Sens. Kerry, Mark Udall (D-Colo.) and other key lawmakers, some of whom later produced letters and statements that hammered regulators’ approach to antitrust enforcement — including press leaks about the commission’s work.

Come on. Google beat the feds with campaign contributions, everybody knows that... All the headlines for the past few years have been about investigations and indictments against big Republican donors.

The first indication I had that Google might not be playing fair was when they systematically began copying and displaying the contents of copyrighted books. I had always assumed that a copyright was something that prevented people from doing exactly that. I've been a little suspicious of Google since then. When you become so large and powerful that you consider yourself above suspicion, that's usually when you start abusing others on a regular basis, often without realizing it or, because you know you can get away with it.

"During the resulting stampede, some mice were crushed accidentally by elephants trying to save them, some were crushed accidentally by elephants who didn't notice them in time, and some, according to one angry mouse still visibly rattled by the ordeal, were crushed by elephants who dislike mice. Thankfully, no elephants were injured in the stampede."

MS ran the same tech info holdout tactic on Netscape causing same to fail despite having a superior product. MS was afraidt Netscape could be modified to function as an operating system and so withheld info Netscape needed to integrate with Windows effectively. Google didn't learn NOT to do the same thing because that's exactly what they did too. Same play, same playbook. They did learn NOT to start a fight when they got caught but rather acquiesce to the powers and promise not to do it again. I wonder if that could work for me next time I get a ticket. In the mean time, U.S. Citizens are sold out once again by their federal employees charged with protecting their interests.

edwould - "MS ran the same tech info holdout tactic on Netscape causing same to fail despite having a superior product. MS was afraidt Netscape could be modified to function as an operating system and so withheld info Netscape needed to integrate with Windows effectively. Google didn't learn NOT to do the same thing because that's exactly what they did too. Same play, same playbook. They did learn NOT to start a fight when they got caught but rather acquiesce to the powers and promise not to do it again. I wonder if that could work for me next time I get a ticket. In the mean time, U.S. Citizens are sold out once again by their federal employees charged with protecting their interests."

And what did Microsoft owe Netscape? Windows is a Microsoft platform, they can choose to support any damn company they please. If another company comes out with another operating system that has the impact that Windows has, then they should release it. Apple is doing just fine in the OS business because they realized few people are more savvy with a computer than to do simple internet browsing and playing video games - so they made a simple OS loaded with gimmicks that could attract exactly that crowd.

It is not the government's job to protect you from business - it is their job to prosecute illegal activity and regulate serious infractions of public safety or impingements on basic freedoms. It is your job to protect you from business. Become a smart consumer, advise your friends to become smart consumers. If you don't agree with the business practices of a company then boycott them, surely you have the intellect to manage that, yes? The fact the left uses the government to bludgeon companies they don't like is a gross misuse of state and federal authority.

chalons - "It's a political favoritism, quid-pro-quo. Crony capitalists get to play by a different set of rules. ."

Based on the tone of the article and serious breaches of authority that have happened in the federal government over the last few years, I am far from convinced that this was anything than another shakedown - either for political gain or for money. Google has every right to be the dominant search engine on the internet, the design is simple and they spend an inordinate amount of time and money tagging sites to make searches more effective. Webcrawler (Netscape) once held that title but Google came out with a superior product.

The whole history of anti-trust is fairly dubious, and more often the prosecution of anti-trust cases has lead to problems for consumers as opposed to benefitting the business, ironically the same community the left is so insistent on hating. Morton Salt provided discounts to large scale grocers that bought big loads of salt, and thus could provide the salt more cheaply to their consumers than a local grocery store who could not. Rockefeller determined that shipping oil in trains was more economical than the tanker or barrelling in a train method that was common in that era. After the anti-trust suit brought against Standard Oil, the price of oil shot up because of inefficiencies introduced by a business that couldn't handle mass transport methods any longer.

The idea that anti-trust somehow 'saves' small business is baloney. It comes under the assumption that the consumer is forced to buy a product, when clearly they are under no obligation to do so. If they want the convenience, then a consumer can expect business to merge into larger business to more economically handle the demand. But even growing business has its pitfalls, if ACME groceries or Bell-South prove anything, because just like government then are prone to becoming so bureaucratic that they fail to keep up with the nimbleness of the market and are either forced to down or capitulate to their lenders.

The world the left wants to keep in place what is dying - the industrial corporate monoliths that once existed. Large, expansive, authoritarian structures that can fiat and control. But the digital age is half here, and the business of tomorrow can no longer be large. They have to be small and efficient to compete with other digital companies that are required to do exactly the same thing. They're trying to build an anachronism that is doomed to failure.

Because those types of links aren't as popular, and the pro-Romney demographics were older, less likely to be mass influencing google search results.

Honestly the coders at google have so much time devoted to algorithem design they aren't going to bother systematically making certain political results appear higher. Obama's staff knew how google works, Obama's senior management staff was 10 times more tech oriented than Romney's... (If nothing else, look no further than the fact Romney's ORCA system was never beta-tested before the election day... Obama's staff would NEVER have let something like that happen), so it'd make no sense to blatantly go against Google's own rules to augment searches.

That wasn't needed when you could beat Romney based purely by outmanuvering him, you didn't need any google-Obama search result conspiricy. That requires a lot of extra time to devote coders to manipulate mundane results while simultaniously avoid breaking algorithems that should be handling those search results.

Google spends money where it stands to gain something. Google spends money to skirt anti-trust regulation, or to navegate the truly archaic and desperatly in need of repair patent system.

They don't need to augment results for candidates... that's a whole different infrastructure in their company, and not something they like messing with unless absolutly necessary.

They'd be buddy buddy next to Obama, Bush, Romney, anyone to pass favorable legislation and rules... but that doesn't mean they also need to subvert their search result processes to do so. Your conspiricy seems more based on an emotional reaction than one based on any kind of knowedge of the people or organization of Google. I've known google coders, google, like all silicon valley companies, do not generally like to waste time or effort to manipulate things if it could break far more important structures. You don't want to go messing with search algorithms for something as silly as an election.

I don't see the left trying to save "industrial corporate monoliths that once existed. Large, expansive, authoritarian structures that can fiat and control", especially since the 'digitial companies' you speek of happen to generally be more Democratic leaning in the first place. Google, Facebook, Microsoft, Apple, etc all gave far more money to Democrats than they did to Republicans, and are certainly the heart of the 'tech world' right now. Plus there are plenty of giant monolythic companies that tend to lobby conservative members of congress... Koch industries anyone? Walmart?

Truthfully, the problems plaguing the tech industry are something that neither Republicans nor Democrats seem to be talking about in large measure... we need wide scale patent and copyright reform, we have a system that was developed well over a hundred years ago and is in desperate need of a 21st century rewrite. You often hear of 'nanotechnology' as always being the next 'cool thing', but thanks to our archaic patent system, it's practically impossible for anyone to even attempt to make progress on the field without needing a team of lawyers to check to make sure you're not stepping on someone's overly broad patent shoes.

http://www.nature.com/n...

The legal system can use a giant revamping from the ground up, not from any "Democrat", "Republican" standpoint, not from a 'left-versus-right' mentality, but from a basic "We need more freedom to invent" standpoint. Neither the left nor the right are talking about how to properly solve our old patent and copyright systems... both sides find it far more profitable to just let giant companies lobby for the rules they need, rather than fix the problems on from the ground up.

Same issue that's happening with Hollywood. Studios take advantage of Hollywood Accounting, while simultaniously have the gall to shout "copyright protection" when trying to pass bills like SOPA (Thank you Lamar Smith for proving that not only Democrats are bought by Hollywood studios). It's often easier (though surprisingly not necessarily cheaper) to try to legislate away complaints than find reasonable alternatives.

zaold - "The legal system can use a giant revamping from the ground up, not from any "Democrat", "Republican" standpoint, not from a 'left-versus-right' mentality, but from a basic "We need more freedom to invent" standpoint. Neither the left nor the right are talking about how to properly solve our old patent and copyright systems... both sides find it far more profitable to just let giant companies lobby for the rules they need, rather than fix the problems on from the ground up."

With all due respect I fail to agree. Large government is large corporate, it's not a word applied only to business. It is simply consolidated power with the authority to do whatever it wishes. What makes it distinct from private industry is that private industry must persuade others to give it authority over them. Government has no compunction or limitation, being that our Constitution is now regularly ignored.

It is most certainly a left or right issue. The term 'conservative' doesn't mean very much in the standard context. Particularly because my philosophy stems from classical liberalism, thus in truth I am a liberal. However, I fully believe in the Constitution of the United States and that it is not just a set of rules that codifies how the US must operate, the Declaration makes specific mentions of rights every individual is entitled to. Not granted by government but by their creator, whatever a person may deem that to be. The idea of patents is an idea of property ownership and entitlement to the fruits of your own labor, which stem from the natural rights defined in our Constitution. Thus it is certainly a right-wing idea, while infiltration of the state into personal lives is the idea of the left-wing.

Actually Cruxis, when a company engages in anticompetitive trade practices, IT IS my governments job to protect me. http://en.wikipedia.org/wiki/S...http://en.wikipedia.org/wiki/A... Pure socialism can't work because nobody can get a government check if nobody works. Pure capitalism can't work because it's a last man standing cage match with only one winner. There's a balance that allows for the motivation that capitalism creates and the charity that socialism fosters. Virtually everyone will experience or need both during some point in their lives, those that think they don't owe society anything because they made it on their own forgot to count the customers that bought their products and services, the government that built the road in front of their house, and the sweet little old lady that nurtured them to adulthood so that they could go out and conquer their competitors. If you don't believe the system should provide some decent relief to those too sick to work, then throw your ailing mother out of the guest house and tell her to get a job, if you haven't already.

@wayknow - You don't know anything except to use this platform for any reason to say or imply anything negative about Obama like all you baggers do. Get over it already. You lost the election because we said hell no! Deuces.

@wayknow - You don't know anything except to use this platform for any reason to say or imply anything negative about Obama like all you baggers do. Get over it already. You lost the election because we said hell no! Deuces.

@wayknow - You don't know anything except to use this platform for any reason to say or imply anything negative about Obama like all you baggers do. Get over it already. You lost the election because we said hell no! Deuces.

@wayknow - You don't know anything except to use this platform for any reason to say or imply anything negative about Obama like all you baggers do. Get over it already. You lost the election because we said hell no! Deuces.

Politico really does like to spin its own drama dropping repub and dem names with abandon. All without saying anything eventually but titilating the minds of the conspiracy freaks and hyper-partisans!

After three pages, the entire article really comes to this:

For all the money and resources the company devoted to stemming criticism, though, antitrust experts believe Google might not have fared as well if the FTC had a stronger legal footing to bring a robust, antitrust enforcement against the search giant. The commission appeared to be influenced by Google’s key argument that competition is only a click away on the Internet.

Bingo!!! With Microsoft's anti-trust case, it could be demonstrated that they used the muscle of having the OS to ship software to folks who buy computers thus reducing the choice and access to competitors. With google, anyone can change search engines at any time. The choice of search engine to use is not forced on anyone. I believe a case against google is not dead, if for instance in future, it can be shown that they are manipulating search results to push their own products surreptitiously without disclosure to consumers. still Politico needs to avoid this kind of insinuation and sensationalized journalism.